Business in Northern Ireland have welcomed many of the tax cuts revealed in today’s mini budget but have again reiterated their call for a restored Executive to help nurse the economy through the current challenges.
The Northern Ireland Chamber of Commerce and Industry said it welcomed the pledge to focus on economic growth but felt the small print of the plans will be crucial.
“Inevitably, the devil will be in the detail of these proposals, but they must strike the right balance between tackling immediate pressures, driving reform and providing for a sustainable future. Ann McGregor, Chief Executive of the chamber said.
She said the focus on corporation tax is particularly pertinent to Northern Ireland, given its nearest neighbour the Republic has a business tax rate of just 12.5%. The Chancellor said he was reversing the planned hike in UK corporation tax to 26% from its current rate of 19%.
“Moves to target certain business costs, including reversing plans to increase corporation tax and national insurance are welcome interventions at a time of critical need. Reversing the planned increase in corporation tax will be crucial for local firms competing on the island of Ireland in particular.
Unsurprisingly, the Chamber has called for Stormont to get back to governing.
“But today’s announcement just underlines the need for a restored Executive to respond in parallel to protect businesses and unlock sustainable growth locally. We need an Executive that can take urgent action on priority issues like reforming business rates, tackling the productivity gap and transforming the planning system to enable green growth.
“That, combined with resolution on the NI Protocol will help restore much needed business confidence.”
Meanwhile, the increase in the lower stamp duty on residential properties will have a significant impact in the Northern Ireland market, according to Ian Creighton, Residential Property Partner law firm Wilson Nesbitt.
“The change to the lower end of the stamp duty relief to £250k makes a very material difference to the Northern Ireland housing market, with 69.5% of the properties currently listed for sale on one of the largest NI property hubs being marketed for £250k or less.
“This is reflected in our own internal statistics, which reveal that in the last three months 75.6% of new enquiries related to properties up to a value of £250k. The increase from £125k to £250k means that 50.1% of those enquirers would now have a £0 stamp duty bill compared to before the change.”
Richard Ramsey, Chief Economist, NI Ulster Bank, said the cuts to the highest rates of income tax announced by the Chancellor will be of little relevance to Northern Ireland tax payers, but agreed the hike in the lower zero rate stamp duty band to £250,000 is hugely relevant.
“The proverbial ‘Rabbit Out of the Hat’ was undoubtedly the abolition of the top rate of income tax (45% for earnings over £150,000). This measure will have been of interest to a very small proportion of the Northern Ireland population (around 6,000 people). Of much more interest to people here is the cut in the basic rate of income tax to 19% from April 2023. That cut was brought forward one-year.
“If the abolition of the top rate of income tax was the rabbit out of the hat, the Stamp Duty Land Tax measures were perhaps the least surprising aspect of the Budget, given how heavily they were flagged. They will be largely irrelevant to first time buyers in Northern Ireland, who were already benefiting from paying no Stamp Duty up to £300,000, which accounts for almost all first-time buyer property purchased here. The increase to £425,000 will be of much more relevant to first time buyers in the South East of England.
“But other homebuyers in Northern Ireland will be much more interested in what the Chancellor announced. With the nil-band rate increased to £250,000, this means that most home purchases in Northern Ireland will now be exempt from Stamp Duty, including second home purchases, and buy-to-let investments. The latter two categories are subject to a higher SDLT rate (3% +).”
He said the Chancellor hasn’t pulled any punches with today’s Budget when it comes to tax cuts, but whether he will succeed in stimulating economic growth remains to be seen.
“It’s hard to escape the fact that this is something of a Hail Mary budget, to coin a phrase from American Football. Kwarteng is the quarterback who has thrown a desperation pass in the slim hope that the economy scores a touchdown by 2024. He may be lucky, but expectations are low.”